 Increasing vessel sizes a red flag for US ports |
Source |
American Shipper |
Post Date |
12/28/2020 |
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Carriers are steadily increasing the size of container ships in the US trades as they seek the economies of scale neo-Panamax vessels with 10,000 to 15,000 TEU of capacity offer.
At the same time, the larger container that exchanges the bigger ships are burdening marine terminal operators with congested terminal yards, chassis shortages, and a lack of sed equipment operators that were precipitated this fall by unprecedented import volumes.
At US West Coast ports, 17.5 percent of vessel calls through October this year, involving ships with capacities of 10,000 to 15,000 TEU, according to PIERS, a JOC.com sister product within IHS Markit. That is up from 1.1 percent in 2010, 8.6 percent in 2014, and 16.5 percent in 2018.
Although the 17.5 percent share in the first 10 months of 2020 is slightly below the 18.2 percent share for all of last year, that is in part because 52 extra-loader vessels called in Los Angeles and Long Beach from September through November to handle the import surge, according to the Marine Exchange of Southern California. The extra-loaders included a mix of larger and smaller vessels.
At East Coast ports, 15 percent of vessel calls in the first 10 months of the year had capacities of 10,000 TEU or more. The first neo-Panamax container ships began calling on the East Coast in 2016 following the widening of the Panama Canal, which allowed vessels up to 14,000 TEU capacity to transit the canal. The share of larger vessels on the East Coast increased rapidly from just 3 percent in 2017, when the height of Bayonne Bridge was raised to allow larger ships to visit container terminals at the Port of New York and New Jersey, to 11 percent in 2019.
Theo Notteboom, an European-based academic who specializes in maritime economics, told JOC.com in April that carriers continued to increase the size of the vessels they deploy in the major trade lanes in order to reduce per-unit costs on each voyage. However, risks involved in this strategy are to be truly effective, the ships must be operated near capacity, and the impact on land operations increases and the economies of scale diminish if the vessels to approach 20,000 TEU of capacity.
Gulf Coast ports do not yet have regularly scheduled services with neo-Panamax vessels, owing primarily to the size of the markets they serve. Most of the large vessels deployed in the US trades are Asia¨CNorth America services, and the Gulf ports have a market share of 5 percent of US imports from Asia, according to PIERS. Still, the ports of Houston and New Orleans are moving forward with expansion projects that will allow terminals to handle larger vessels in anticipation of increased deployment.
Big ships port congestion problems
US ports are not expected to see regularly scheduled services by the ultra-large ships of 20,000 TEU plus capacity that call regularly now in the Asia¨CEurope trade, owing to harbor draft limitations and the stress these ultra-large vessels place on the marine terminals, gates, and inland infrastructure. Lars Jensen, CEO and partner at SeaIntelligence Consulting, said the workhorses in the eastbound trans-Pacific will continue to be vessels in the 12,000 to 14,000 TEU capacity range.
Even vessels of that size, however, are straining the resources of US load-center ports, especially Los Angeles, Long Beach, New York, and New Jersey, as import volumes reach unprecedented levels. US imports from Asia moving through Southern California increased 20 percent plus each month from August through November on a year-over-year basis, according to PIERS. US imports from Asia through New York-New Jersey, the largest East Coast port, increased 19.1 percent in October and 35.1 percent in November from the same months last year.
Scott Schoenfeld, general manager of Fenix Marine Services in Los Angeles, told the JOC Port Performance North America virtual conference Dec. 10 the biggest challenge the Southern California ports face is the increasing size of the ships and container exchanges they generate compared with the capabilities of the container yards, cranes, and terminal operating tems to handle the cargo surges.
¡°Putting a 6,000 TEU ship in a 100 acre terminal is a similar challenge to putting an 18,000 TEU ship in a 300 acre terminal,¡± Schoenfeld said.
The Los Angeles-Long Beach port complex handles much larger container exchanges in each vessel call than do East Coast ports. That is because in the Pacific Southwest services, vessels call at only two ports, either Los Angeles or Long Beach inbound and Oakland outbound, with vessels disging and reloading 80 to 85 percent of their contents in Los Angeles-Long Beach. East Coast services normally involve calls at several gateways, each with lower container exchanges, in addition to deploying smaller vessels on average.
Rich Ceci, senior vice president, technology and projects, at the Port of Virginia, told the Port Performance conference that Los Angeles-Long Beach regularly handles 8,000 to 12,000 container moves per vessel call, whereas East Coast ports are in the 2,500 to 4,500 range.
The major East Coast gateways have more vessel calls in a variety of trade lanes ¡ª trans-Atlantic, Latin America, Africa, and the Middle East ¡ª than do West Coast ports. Most of the West Coast services are in the trans-Pacific, where vessel sizes are larger. East Coast ports handle more smaller-sized vessels on their other services, which pulls down the average vessel size, but handling more vessel calls comes with different types of challenges for those ports, Ceci said.
There are a lot more calls. This puts pressure on yard planning,¡± he said.
The larger exchanges, along with unprecedented import volumes, is causing congestion throughout the Southern California supply chain, with average truck turn times in Los Angeles and Long Beach spiking, container dwell times on the rise, and average chassis dwell times at warehouses in the region more than double the normal time.
Congestion issues at terminals, increasing chassis dwell times at warehouses, and truck capacity constraints have arisen in recent weeks on the East Coast, not only in New York-New Jersey, but also at US Southeast ports, according to Uffe Ostergaard, president of the Americas at Hapag-Llo
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